NEWS ANALYSIS: Carbon confusion

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The Carbon Tax will impact on channel business but just how deeply is a moot point with both analysts and executives as they begin looking at its implications.

One thing is certain: for better or worse the Gillard Government’s clean energy bills have passed through the Senate and will become law from July 1, 2012.

IDC vertical markets research manager, Emilie Ditton, expects the tax to have a tangible impact on ICT spending in the short term.

“Organisations in the manufacturing, transport and energy industries that are required to pay the tax will face an increase in costs that will have to be either managed internally through greater efficiency and productivity, or passed onto customers,” she said.

As manufacturing organisations in Australia are already under very serious cost pressures and have been working to remove costs out of their businesses for a number of years, Ditton foresees the capability to absorb this additional layer of cost will “vary from one organisation to another”.

As an example, Ditton points out that with supply chain automation in place, it will be very difficult for many manufacturing organisations to remove cost out of the business further without involving the realignment of processes with the reduction of energy usage being the central process design metric.

As a result, IDC is predicting that affected organisations will increase their investments in green IT solutions that enable monitoring, management and reduction of energy.

“This is something that organisations are already doing, but the monitoring and management of usage will be driven much deeper within the operational processes,” Ditton said.

Synnex CEO, Kee Ong, said the carbon tax would be a concern to his business. Synnex runs an extensive logistics operation across the country.

“The cost of operations is going to go up,” he said. “If we have to pass on price increases, then we will do so.”
However, organisations in Australia are used to managing through high operational costs, Ong said, and he was confident that he wouldn’t need to outsource logistics to third parties.

“We need to consider not just the costs of doing business, but the quality we can provide,” Ong said. “Being flexible is important, so we need our own trucks. The key is in being able to move up the value chain and be able to offer customers good value solutions.”

Ovum research director, Kevin Noonan, said there will be ongoing work in delivering the proposed Emissions Training Scheme [ETS] should the government win the next election.

“Should Labor lose the election, Opposition leader Tony Abbott is committed to unpicking the legislation and compensating some impacted sections of the community,” he said.

“Either way, environmental issues are set to remain hot topics for some years to come.”

However, Noonan said there is still a significant level of uncertainty around the extent the carbon tax will affect businesses, as “there has been very little room for discussion about the mechanics of actually delivering what really is a complex piece of legislation.“

The new legislation is expected to have an affect on IT businesses that are heavily reliant on large amounts of electricity, such as datacentres, though Canberra Data Centres (CDC) managing director, Greg Boorer, expects certain opportunities to crop up from early preparation.

“In a roundabout way, it will reward businesses like ours that have made investments in being the most efficient data centres possible, as customers will invest in the most efficient energy bills possible,” he said.

While CDC is predominantly a Government-based data centre provider, Boorer still expects it to “be a nervous time to be confused about commercial clients”, as commercial businesses are not bound by the same constraints as vendors targeting the Government market and “are able to take their costs offshore if necessary”.

He is, however, convinced carbon emissions taxes will become “a global movement as the economies around the globe recover.”

The view adopted by Boorer is that “Australia is in the position to be an early adopter and could have a five-year start on being a green manufacturing country,” but only if the money raised through the tax is “not just fed back to the big polluting companies.”

With datacentres of its own, Anittel CEO, Peter Kazacos, is rightly worried that it is going to affect its own operation.

“The impact there is going to be on our competitiveness, but not as much as some other sectors,” he said.

Kazacos warned that regional Australia could be hit harder by the carbon tax if it is not adequately compensated, though not as much in the ICT area.

“It’s going to be offset by the NBN, and in many cases, the product will become virtualised,” Kazacos. And, as such, it won’t be an issue with the Carbon Tax.

“The problem is more with physical products, which is less of an issue in our industry,” he said.

As more and more people look to reduce their carbon footprints by investing in green product refreshes, Kazacos sees a silver lining in the opportunity to upgrade and the new revenue streams this can create.

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